Finance and Financial Management Commons^™

Essays On Financial Intermediation, Yong Kyu Gam

Doctor of Business Administration Dissertations

Chapter 1 investigates a regulatory spillover effect of the Basel III liquidity standard on the real economy through a series of difference-in-difference estimations. Since the Basel Committee’s official endorsement for the new liquidity regulation in December 2010, a bank exposed to high liquidity risk reduced its loan proportion significantly, making a negative real effect on its surrounding economy via a bank-lending-channel. The new regulation also induced a bank with a weak liquid balance sheet to raise its deposit rate aggressively, generating a liquidity problem in a nearby local bank through a deposit-competition-channel and ultimately curbing an expansion of the local …

Caught In The Headlights: Revising The Road Kill Hypothesis Of Antebellum Illinois Bank Failures, Scott N. Clayman, Scott Deacle, Andrew J. Economopoulos

Business and Economics Faculty Publications

Illinois had a dismal free banking experience, with over 80% of its free banks failing by the start of the Civil War. Researchers agree that a dramatic change in bond prices was the catalyst, and some have shown that the riskiest banks, ex ante, were the most likely to fail. This study examines how Illinois free banks adjusted their portfolios in the face of increased political and financial risks prior to Abraham Lincoln’s election as president. Lincoln’s nomination in May 1860 and the Democratic Party schism in June 1860 raised the likelihood of secession and the potential for a significant …

The Value Of Trading Relations In Turbulent Times, Marco Di Maggio, Amir Kermani, Zhaogang Song

Research Collection Lee Kong Chian School Of Business

This paper investigates how dealers’ trading relations shape their trading behavior in the corporate bond market. Dealers charge lower spreads to dealers with whom they have the strongest ties and more so during periods of market turmoil. Systemically important dealers exploit their connections at the expense of peripheral dealers as well as clients, charging higher markups than to other core dealers. Also, intermediation chains lengthened by 20% following the collapse of a flagship dealer in 2008 and even more for institutions strongly connected to this dealer. Finally, dealers drastically reduced their inventory during the crisis.

The Value Of Trading Relations In Turbulent Times, Marco Di Maggio, Amir Kermani, Zhaogang Song

Research Collection Lee Kong Chian School Of Business

This paper investigates how dealers’ trading relations shape their trading behavior in the corporate bond market. Dealers charge lower spreads to dealers with whom they have the strongest ties and more so during periods of market turmoil. Systemically important dealers exploit their connections at the expense of peripheral dealers as well as clients, charging higher markups than to other core dealers. Also, intermediation chains lengthened by 20% following the collapse of a flagship dealer in 2008 and even more for institutions strongly connected to this dealer. Finally, dealers drastically reduced their inventory during the crisis.

Financial Management Issues Of College-Aged Students: Influences And Consequences, Katharine N. Widener

Selected Honors Theses

College students have acquired a reputation of irresponsibility and impulsivity, which has contributed to the perception that they are poor managers of money. This researcher sought to establish a clearer picture of the full story behind how college students handle their finances through a comprehensive literature review. Several searches were conducted on the topics of college students, finances, money management, debt levels, and other related terms. Scholarly articles were analyzed for common themes and research patterns, and the various strings of research identified were categorized into three main headings: Financial situation, financial influences, and financial consequences. The three major headings …

The Importance Of Profitability In Determining Volatility Across Industries With Different Debt Levels, Timothy De Silva

Undergraduate Economic Review

This paper seeks to investigate the relationship between debt and volatility. No consensus currently exists on the effects of financial leverage on stock volatility. With the increased use of complex financial derivatives in recent decades, the importance of understanding the factors that influence volatility has become extremely important. By looking at a cross-section of industries, this paper demonstrates how the importance of profitability for explaining volatility changes depending on industry debt levels, which are endogenous and depend on industry characteristics.

Behavioral Finance And Its Impact On Investing, Jordan Fieger

Senior Honors Theses

The field of behavioral finance has seen incredible growth over the past half century as it has explored the effect that cognitive psychological biases can have on investors’ financial decisions. Behavioral finance stands in stark contrast to the efficient market hypothesis, as it attributes market inefficiencies to investors who are not perfectly rational human beings. It offers a solution to the observed 3.5% gap that active equity investors miss out on in the market compared to passive index funds, which it attributes to their emotions and psychological biases. These common human biases can be grouped into five major categories: heuristics, …

Essays In Financial Economics, Johnson Owusu-Amoako

Doctoral Dissertations (DBA)

In this study, we empirically investigate the impact of credit default swap rates on short-term interest rates. We find that CDS rates significantly impact short-term interest rates. The impact remains significant after controlling for inflation and unemployment. Applying co-integration test and vector error correction modeling, the study also finds a causal relationship between CDS rates and short-term interest rates. These relationships are confirmed through autoregressive conditional heteroscedasticity (ARCH), exponential generalized ARCH [EGARCH] and vector auto-regression (VAR) analyses. The empirical results have important implications in setting short-term interest rates. A regular revision of policy targeting to capture the continual changes in …

Selecting An Alternative National Banking System Against Fractional Reserve Free Banking: The Greatest Modern Fraud?, Josiah J. Bardy

Senior Honors Theses

This paper serves as a compilation and analysis of different banking systems with an emphasis on fractional reserve free banking. Contemporary academic literature has debated fractional reserve banking with revisited scrutiny since the 2007–2009 financial crisis. The Austrian School, drawing conclusions from the Austrian business cycle theory, blames central banking for boom-bust economics. One proposed solution, fractional reserve free banking, eliminates the central bank’s control for a purer form of fractional reserve practice; however, this system may be inherently fraudulent and unethical. After completing an economic analysis of the western world’s banking system, this paper then explores an alternative solution.

Corporate Donations And Shareholder Value, Hao Liang, Luc Renneboog

Research Collection Lee Kong Chian School Of Business

Do corporate donations enhance shareholder wealth or reflect agency problems? We address this question for a global sample of firms whereby we distinguish between charitable and political donations, as well as between donations in cash and in kind. We find that charitable donations are positively related to financial performance and firm value, which is consistent with the value-enhancement hypothesis. This positive effect on firm value is stronger for cash than in-kind donations. In contrast, political donations do not appear to enhance shareholder value, but rather tend to reflect agency problems, as they are higher for firms with poor internal corporate …

Volatility Analysis Of Us Equity And Federal Funds Markets Through The Recent Financial Crisis And Recovery Periods, Based On Release Of Fomc Meeting Statements And Minutes, Hanxiao Yue

Student Theses and Dissertations

The Federal Open Market Committee (FOMC) is the principal maker of monetary policy in the United States. The main instrument of monetary policy is the target federal funds rate, which is de facto the base interest rate of the US economy. The FOMC meets around eight times a year to discuss the economic outlook and decide on this metric. Throughout most of its history, the Fed has been opaque about how it decides on monetary policy, but in recent years it has adopted a more transparent disclosure policy. For each FOMC meeting, it currently releases a brief statement immediately after …

Does Wage-Inflation Targeting Complement Foreign Exchange Intervention? An Evaluation Of A Multi-Target, Two-Instrument Monetary Policy Framework, Taojun Xie, Jingting Liu, Joseph D. Alba, Wai-Mun Chia

Research Collection Lee Kong Chian School Of Business

We assess the inclusion of wage inflation as an intermediate target of an emerging central bank using a dynamic stochastic general equilibrium model with sticky wages and prices calibrated for the South Korean economy. The model includes wage inflation as an additional target jointly with domestic price inflation and the output gap in a Taylor- type interest rate rule operating with a sterilized foreign exchange (FX) intervention rule. Our results show a complementary relationship between wage inflation targeting and price inflation targeting. That is, by supplementing price inflation targeting with wage inflation targeting, welfare improves for cases with and without …

Corporate Investment And Stock Liquidity: Evidence On The Price Impact Of Trade, Moonsoo Kang, Wei Wang, Chanyoung Eom

Business Faculty Publications

We document that corporate investment contributes to stock liquidity. This study demonstrates a positive relationship between abnormal corporate investment and stock liquidity in the cross-section.Moreover, stock liquidity
improves more apparently for firms with financial constraints. Our robustness check confirms that the
existing regularities cannot explain the current finding. This analysis suggests that corporate investment decreases
the risk of a firm and that a change in the risk affects the behavior of a market maker, leading to an increase
in stock liquidity.

The Role Of Islamic Finance In Economic Development, Nora Khan

Lingnan Journal of Banking, Finance and Economics

Islamic financial institutions have been growing rapidly in the past few years. Islamic finance refers to investments that are permissible in accordance with Sharia, the Islamic law. Sharia law views money as a measuring tool for value and not an “asset” itself. “It does not permit receipt and payment of riba(interest), gharar(excessive uncertainty), maysir(gambling), short sales or financing activities that it considers harmful to society” (IMF website). Interest, a form of income from money, is therefore prohibited. For example, the income obtained from banks must come from the gain or loss of the enterprises they underwrite and not from interest …

Fdi And Manufacturing Industry In Asia, Luyi Jin

Lingnan Journal of Banking, Finance and Economics

The study finds that China’s manufacturing still maintained a growth level from 2003 to 2013. However, the growth has been declining. The rapid development of ASEAN economies led to the rise of the emerging manufacturing countries which have slowly adjusted and found their own advantages in challenging China.

The main conclusions of this paper are twofold. First, China will soon lose her low labor cost competitive advantage and needs to look for new strategy or industrial upgrades. Second, the current pattern of international division of labor will last for a fairly long period that developing countries will continue to serve …

Portfolio Recallocation And Exchange Rate Dynamics, King Chun Wong

Lingnan Journal of Banking, Finance and Economics

This empirical paper aims to review a previous literature entitles “Portfolio Reallocation and Exchange Rate Dynamics”. The literature stated that including financial market structure can provide a micro-foundation to complement other macro-based models for exchange rate dynamics which typically are meaningful for the medium and long terms but not satisfactory for the short run. The model in the literature offers another way to look at exchange rate dynamics that is significant in the short run and more practical in nature. Undoubtedly, many investors in the financial market, such as traders, dealers, fund managers, and speculators who adjust their portfolio components …

How Do Cdos And Cdss Influence The Crisis Of 2008, Martin Buffet

Lingnan Journal of Banking, Finance and Economics

Everybody has heard about the “subprime” crisis but do we really know how it occurred and why this phenomenon had such an impact on our economies. One aspect of the answer to this question lies in the trade of credit default swaps (CDSs). These financial products led to less transparency in the markets and to a very collectively vulnerable financial system. This created a vicious circle that had not been anticipated by our financial regulators. In this paper, we will discuss how it occurred and what could have been done to avoid, or at lease reduce, the impact of these …

The Study Of Enhanced Performance Measurement Of Mutual Funds In Asia Pacific Market, Juzhen Li

Lingnan Journal of Banking, Finance and Economics

This empirical paper will compare the result by running Costa and Jakob's models (2010) using mutual funds in Asia Pacific market excluding Japan. Costa and Jakob's paper, Enhanced Performance Measurement of Mutual Funds: Running the Benchmark Index through the Hurdles, is highly related to this empirical paper and is generally based on Carhart's four-factor model (Carhart, 1997) with US securities market data. Apart from the comparison between Asia Pacific market excluding Japan and US market, further research on auxiliary and heteroscedasticity will also be conducted.

Monitoring And Employee Shirking: Evidence From Mlb Umpires, John Charles Bradbury

Faculty Articles

Standard neoclassical principal-agent theory predicts that stricter monitoring should reduce employee shirking from principal desires; however, recent analyses indicate that social aspects of principal-agent relationships may result in monitoring “crowding out” disciplinary effects. From 2001 to 2008 Major League Baseball (MLB) instituted an automated pitch-tracking system (QuesTec) to assist in monitoring its umpires. The asymmetric implementation of this new monitoring technology allows for the comparison of monitored and unmonitored umpires to identify shirking to placate on-field lobbying pressure. Estimates identify deviations in calls associated with monitoring; however, overall, umpires appeared to be quite sensitive to league directives for changes in …

Essays In Corporate Responsibility And Finance, Mert Demir

Dissertations, Theses, and Capstone Projects

This dissertation consists of three chapters:

Chapter 1: The Effects of Corporate Social Performance and Social Norms on Market Valuation of Nonfinancial Disclosures Using a novel measure of the quality of corporate social responsibility (CSR) disclosures by global companies, this paper analyzes how CSR report quality affects firm value when mediating roles of social pressure and CSR performance are considered. I find that firms operating in socially controversial industries enjoy higher valuations when they issue high-quality CSR reports. I also find that for firms with poor CSR performance, higher-quality CSR disclosure is associated with a decline in firm value, while …

Searching For Illicit Behavior Through Changes In Productivity: The Case Of Roger Clemens And Performance-Enhancing Drugs, John Charles Bradbury

Faculty Articles

Major League Baseball pitcher Roger Clemens has been accused of using performance-enhancing drugs to boost his performance. If Clemens used ergogenic aids consistent with the accusations of use, then unusual changes in productivity may be evident in his performance record. Two previous studies have examined Clemens’s career and reached conflicting conclusions: Bradlow et al. (2008) declares Clemens’s career to be “atypical” while Albert (2009) finds Clemens’s productivity to be unusually strong but similar to other pitchers who have not been linked with performance-enhancing drugs. This study examines Clemens’s performance at times of alleged use and over his career and finds …

Is The Dodd-Frank Act Destroying What Is Left Of U.S. Thrifts?, Scott Deacle

Business and Economics Faculty Publications

I examine data from 1992 to 2015 to assess the Dodd-Frank Act’s impact on the performance of U.S. depository institutions, thrifts in particular. Ceteris paribus, the average FDIC-regulated institution experienced a decline in profitability as measured by pre-tax return on assets (ROA) following the Act’s passage, but the decline was concentrated among commercial banks. Small thrifts increased pre-tax profitability, after controlling for other factors including weak economic growth. Depository institution loan quality improved after Dodd-Frank, less so for small thrifts but more so for large thrifts. Efficiency ratios, which regulatory costs affect, increased, more for thrifts than banks.

Luck, Justice And Systemic Financial Risk, John Linarelli

Scholarly Works

Systemic financial risk is one of the most significant collective action problems facing societies. The Great Recession brought attention to a tragedy of the commons in capital markets, in which market participants, from first-time homebuyers to Wall Street financiers, acted in ways beneficial to themselves individually, but which together caused substantial collective harm. Two kinds of risk are at play in complex chains of transactions in financial markets: ordinary market risk and systemic risk. Two moral questions are relevant in such cases. First, from the standpoint of interactional morality, does a person have a moral duty to avoid risk of …

Examining Poverty, Entrepreneurship, And Multinational Corporation Participation In South Africa, Stephanie Furlough-Morris

Walden Dissertations and Doctoral Studies

Economic development is seen as the best means of accomplishing the goal of eradicating extreme poverty, and at the heart of this development are for-profit companies, especially multinational corporations. The specific problem examined in this study was whether levels of poverty in South Africa had been significantly impacted by the activities of multinational corporations and the level of entrepreneurship in its 9 provinces. To build upon empirical research on the sources of poverty alleviation and the impact of large global enterprises, the purpose of this study was to examine the impact of entrepreneurship and multinational corporation presence on the change …

Editor's Note, Marites Tiongco

DLSU Business & Economics Review

No abstract provided.

The Role Of Gender And Ethnic Diversity On The Performance Of Malaysian Private Companies, Rayenda Khresna Brahmana, Mohd Waliuddin Mohd Razali, Hui Wei You

DLSU Business & Economics Review

This study examines the effect of gender diversity and board diversity on Malaysian firm performance. This study is different from other studies because instead of using publicly listed companies, it uses 3,735 private companies over 2009–2014. We find that gender has no significant effect on the firm performance but firm’s characteristics such as firm age, firm’s size, liquidity, and leverage have significant effects on the firm performance. Our research further indicates that ethnic diversity in the board of directors may give better performance to companies. This research implies two important findings for the policy makers. First, the encouragement of gender …

Does Diversification Lead To Better Loan Portfolio Returns? Empirical Evidence From Indonesian Banks, Apriani Dorkas Rambu Atahau, Tom Cronje

DLSU Business & Economics Review

The composition of the loan portfolios of Indonesian banks are analysed in this study to determine whether loan diversification or loan focus strategies lead to better loan portfolio returns. This study is based on secondary data obtained from the Indonesian Banking Directory of the Indonesian Central Bank, as well as commercial bank annual reports provided by Infobank magazine and the Indonesian Banking Development Institute. Data pertaining to 109 commercial banks for the period 2003 to 2011 were analysed using non-parametric testing of means and panel data regression. The research findings indicate that the loan portfolios of government-owned, domestic-owned, and foreign-owned …

Financial Performance And Sharia Compliance: A Comparative Analysis Of Indonesian And Malaysian Islamic Banks, Heru Fahlevi, -- Irsyadillah, Putra Randa

DLSU Business & Economics Review

The purpose of this paper is to evaluate the financial performance and the sharia conformity of Indonesian and Malaysian Islamic banks. In particular, the study aims to expand the approach of Islamic banks performance assessment

by adding two models of sharia conformity measurements, that is, Sharia Conformity and Profitability (SCnP) and Sharia- Compliant Indicator (SCI). The SCnP model unveiled that the studied Islamic banks generally conform with the sharia

principles, although they were relatively less profitable. The Malaysian banks performed financially better during the period of study, but the Indonesian Islamic banks conformed more to the Islamic principles. In addition, …

Investigation Of Sufficiency Economy Philosophy Reporting In Thailand, Muttanachai Suttipun, Sureerat Saefu

DLSU Business & Economics Review

The aims of this research are to investigate the extent and level of sufficiency economy philosophy (SEP) reporting in the annual reports of companies listed on the Stock Exchange of Thailand (SET) and to determine the relationships between corporate characteristics, SEP reporting, and financial performance. Content analysis is used to quantify SEP reporting in the 2012 annual reports of 222 Thai SET-listed companies, while descriptive analysis is employed to describe the type and level of SEP reporting. The relationships between corporate characteristics, SEP reporting, and financial performance are investigated using a correlation matrix and path analysis. The findings show that …

Measuring Customers’ Perception In Bancassurance Channel Using Psychometric Scale, Ranjit Singh, Mousumi Choudhury

DLSU Business & Economics Review

The study attempts to investigate the customers’ perception towards bancassurance channel. Customers’ perception towards bancassurance is studied by considering six attributes, namely, compliance, tangible infrastructure, reliability, responsiveness, assurance, and empathy. The study is based on primary data collected using structured questionnaire from the customers buying life insurance policy of SBI Life through different branches of State Bank of India in Guwahati City of Assam. Cronbach’s alpha is used to test the reliability of the questionnaire. Other statistical tools like Mean, Standard Deviation, Kolmogorov-Smirnov, and Friedman test were used to arrive at suitable conclusion. The study finds that customers have favourable …